Food Reserve Agency v Elson Banda and 2 Ors (Appeal No. 211/2008) [2013] ZMSC 62 (24 January 2013)

IN THE SUPREME COURT FOR ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL NO. 211/2008 SCZ/8/275/2008 BETWEEN: FOOD RESERVE AGENCY APPELLANT AND ELSON BANDA KENNEDY CHISUTA ISAIAH CHISEMA 1 ST RESPONDENT 2ND RESPONDENT 3RD RESPONDENT CORAM: Mambilima, D. C. J., Sllomba and Mwanamwambwa, J. J. S., On 2 nd June 2009 and 24th January 2013 For The Appellant: For the Respondent: Mr. N Okware, of Messrs. Okware and Associates. Mr. M Chitundu of Messrs. Permanent Chambers. JUDGMENT Mwanamwambwa, JS, delivered the Judgment of the Court. Case Referred to: 1. Barclays Bank Zambia PLC vs Zambia Union of Financial Institutions and Allied Workers [2007) Z. R. 106. Legislation referred to: 1. The Employment Act, CAP 268, as amended by Act No. 15 of 1997. Section 268 (2) (c). The delay in delivering this Judgment is deeply regretted. It is due to a heavy workload. Hon. Mr. Justice S. S. Silomba was part of the Court that heard this appeal. He has since retired. Therefore, this Judgment is by the majority. -J2- This is an appeal against the Judgment of the Industrial Relations Court, of 8 th September 2008, awarding the retrenched Respondents damages for the two years remaining portion of their contracts of employment with the Appellant. The facts of this matter were that the Respondents were employed on fixed written contracts of three years. After serving for about one year, they were given three months notice, terminating their contracts by way of redundancy. The Labour Officer was notified of the termination, though late. He accepted the notification but reprimanded the Appellant. The Appellant invited the Respondents to discuss the redundancy package. The Industrial Relations Court found the termination wrongful, for non compliance with Section 26 (B) (2) (c) of the Employment (Amendment) Act, No. 15 of 1997, as regards notice to the Labour Officer. It awarded the Respondents damages, equivalent to 24 months, the unserved period of their contracts of sale. However, the reasons for the redundancy were found to be genuine. The Appellant has appealed to this Court, advancing two grounds. The first ground is that the trial Court misdirected itself, in law and fact in holding that the Respondents are entitled to damages because the Appellant did not notify the proper officer in accordance with the Regulations. The second ground is that the lower Court misdirected itself in law and in fact in awarding the Respondents benefits -J3- for the unexpired period of the fixed term contracts of employment and for awarding them other conditions enjoyed as an incidence of their contract of employment. On ground one on behalf of the Appellant, Mr. Okware submits that the evidence clearly showed that the proper officer was informed of the redundancy by the Appellant. He points out that although the notification was late, the proper officer accepted the redundancy as justified. That the trial Court noted that the proper officer reprimanded the Appellant for late notification, thereby failing to strictly follow the procedure. He submits that the trial Court failed to consider peculiar facts of the matter, which should have mitigated against the award of punitive damages. He gives such facts as follows:- "1. That reasonable notice was given to the Respondents of the pending termination. 2. That invited the Respondents were contribution to the redundancy package. to make their 3. That the Appellant notified, though late, the proper officer, which notification was accepted, though with a reprimand. 4. That the redundancies were in fact genuine, as found by the Court below. He adds that an award of damages, in this case, equivalent to the remaining period of years salaries and other allowances, was a classical case of virtual reinstatement without consideration and runaway damages of "near vengeance". In response on behalf of the Respondents, Mr. Chitundu submits, that the purported termination was ineffective, null and void on the ground that there was no approval by the -J4- proper officer. That the proper officer was not notified. That failure on the part of the Appellant to comply with the law is fatal. Therefore, the Appellant must be ordered to pay damages or to reinstate the Respondents. In support of his submission he cited the following cases:- (a) Tayali and Thosi v ZCCM Limited (Appeal No 139 of 1996). (b) PTC Limited v Salim Jack Phiri [1995/97] Z. R. 61. (c) Hapeeza v Zambia Oxygen Limited [1988-1989] Z. R. 202. (d) Mubanga v Tanzania Zambia Railway Authority (1987] Z. R. 43. On ground two Mr. Okware attacks the award of salary and other allowances, for the remaining peribd of the Respondents' contracts of employments, as wrong. He points out that the Respondents were given three (3) months notice of termination of their employment by redundancy. He argues that there was no sudden loss of employment. That further, the redundancy was later found to be genuine. That for not notifying the proper officer in time, the Appellant was reprimanded. That the reprimand, in itself, was a sanction. He submits that the Supreme Court on many occasions pronounced itself against the practice of awarding damages for periods not worked for; <'run away" damages. In support of his submissions, he cites ZISC Limited v Singongo and Kitwe City Council v William Ng'uni [2005] Z. R.57. He finally prays that the award be set aside. -J5- In response on ground two, Mr. Chitundu supports the trial Court's award of damages and allowances, to the Respondents, for the unexpired period of their fixed terms of contracts. He argues that the Respondents' three year contracts did not run their full period; because they were wrongfully terminated by the Appellant, after only one year. He submits that the effect of non-compliance with the mandatory requirement of notification and obtaining prior approval from the proper officer, warrants the Court to award damages for the remaining period of 24 months. In support of his argument, he refers to:- (a) Chitomfwa v Ndola Lime Company Limited [1999] Z. R.172. (b) ZCCM Ltd v Zulu [1999] Z. R. 80. (c) Zambia Airways Corporation v Mubanga [1990/1992] Z. R.149. (d) Nvoni v Attorney General SCZ Judgment No 11 of 2001. In these cases, the Supreme Court awarded damages for 12 to 24 months' salary for wrongful termination of employment. He urges us to uphold the award of damages. We have considered the grounds of appeal and submissions by Counsel thereon. The Judgment in the Court below was premised on the perceived non-compliance, by the Appellant, with Section 26B (2) (c) of the Employment Amendment Act, No. 15 of 1995. And indeed, even before us, the submissions were centred on that issue. In our view, that was a misdirection by the Court below. -J6- From the Judgment in the Court below, we note that the three Respondents were employed under written contracts for three years. As we see it, the question was not whether Section 26B (2) (c) of the Act was complied with by the Appellant; but rather, whether it applied to the Respondent's written contracts of service. This issue was dealt with in Barclays Bank Zambia PLC v Zambia Union of Financial Institutions and Allied workers ( 1). In that case, this Court held that Section 26B of the Employment Act, and indeed the whole of Part IV of the Employment Act, under which Section 26B falls, does not apply to written contracts. It applies to oral contracts only. In effect, we hold that the decision and award of damages were made on the wrong basis. Accordingly, we hereby reverse the lower Court's decision and set aside the award of damages. Having said so, we find it unnecessary to deal with the question of quantum of damages. We allow the appeal. We award costs to the Appellant, to be truced in default of agreement. I. C. MAMBILIMA DEPUTY CH(EF JUSTICE